SERVICE REDEFINED: DEVELOPING BEHAVIOR-BASED PROGRAMS FOR CREDIT UNIONS
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Most banks and credit unions offer products that treat all customers / members the same rather than focusing on building products and service programs that respond to the unique behaviors of their age and lifestyle. In order to increase profitability, banks and credit unions must design behavior-based products and programs. This presentation describes how to do just that.
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SERVICE REDEFINED: DEVELOPING BEHAVIOR-BASED PROGRAMS FOR CREDIT UNIONS
- 1. THE NEW DEFINITION OF SERVICE MIKE KERSTEN DAMIEN HAYES
- 2. MARKET DISRUPTERS OF THE LAST DECADE © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL2
- 3. MARKET DISRUPTERS OF THE LAST DECADE © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL 3 FINANCIAL CRISIS
- 4. MARKET DISRUPTERS OF THE LAST DECADE © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL4 DATA AGGREGATION
- 5. MARKET DISRUPTERS OF THE LAST DECADE © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL5
- 6. MARKET DISRUPTERS OF THE LAST DECADE © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL6 NEW CHANNELS
- 7. THE PROBLEM IS THAT MOST PRODUCTS DO NOT SUPPORT SERVICE STRATEGIES © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL7 Most banks offer products that treat all customers the same rather than focusing on building products and service programs that respond to the unique behaviors of their age and lifestyle.
- 8. CURRENT STATE OF INDUSTRY PRODUCTS Product designs do not reflect your strategic goals Limited differentiation creates commoditization Similar products create front-line sales challenges CONFIDENTIAL
- 10. Conducted November 2014 Surveyed 1,200 consumers Consumers represented 3 groups: lower mass market upper mass market mass affluent Surveyed 400 small businesses OUR SURVEY WITH INFORMA © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL10
- 11. NOTABLE RESULTS… 20% of millennials are currently shopping for a checking account Millennials are 64% less likely than the overall market to prefer a product with overdraft coverage 75% of millennials bank with the same institution as their parents 88% of un/underbanked would pay between $5- $10 monthly for an account with no other surprise fees CONFIDENTIAL
- 12. NOTABLE RESULTS… 63% of mass affluent would increase deposit balances to receive cash rewards on their checking account Mass affluent have no statistical difference in preference between interest versus cash rewards (2.6% higher preference for interest) 97% of small business owners are satisfied with their current banking relationship 96% of small business owners with a credit relationship selected their bank based on credit rather than deposit or treasury services. CONFIDENTIAL
- 13. NOTABLE RESULTS… Consumers (including Millennials) at all levels are willing to perform “sticky behaviors” in order to receive rewards All prefer monthly rewards. Millennials would switch to an FI with a product that offered ATM fee refunds and online, mobile and debit card access with a low monthly fee. CONFIDENTIAL
- 14. OUR CULTURE AND EXPECTATIONS HAVE CHANGED © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL14
- 15. OUR INDUSTRY IS UNDER ATTACK © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL15
- 16. OVERVIEW OUR MISSION TO IMPROVE THE PROFITABILITY AND PRODUCT INNOVATION OF FINANCIAL INSTITUTIONS BY PROVIDING SMARTER, DEEPER, ACTIONABLE ANALYTICS ON THE FINANCIAL BEHAVIORS OF CONSUMERS AND BUSINESSES. ©2015 SAYLENT TECHNOLOGIE S,INC. CONFIDENTIAL Winner 2012 2013 2014 America’s fastest growing private companies
- 17. WHAT IS BEHAVIOR-BASED PRICING? © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL17 Customer/Account Incentives: Interest rate adjustments Cash back ATM surcharge reimbursements Transaction fee refunds Service charge rebates Points Annual bonuses Merchant specific discounts or credit Deploying programs that drive customer behaviors based on incentives that motivate them Reward for behaviors Banks wants: Deposits Account fees Interchange E-statements Loan usage Financial services relationship Primary relationship status (DD)
- 18. EXAMPLE PROGRAMS IN THE MARKET TODAY © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL18
- 19. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL19 EXAMPLE PROGRAMS IN THE MARKET TODAY
- 20. DEVELOPING YOUR BEHAVIOR-BASED PROGRAMS CONFIDENTIAL
- 21. INTEGRATION WITH CORE 10/2/2015 © 2014 SAYLENT TECHNOLOGIES, INC.21 FI’s files Data Service Relational Account360 Data Flow FI’s files FI’s files FI’s files Customer Tables Staging Tables Live Tables Reward files Creating XML Reward files Creating XML Profitability Household Keys Etc. Cash Back Incentives Fee Rebates Interest Rate Adjustments SC Waivers Core Accounts Transactions Mortgages Investments Etc. Product Packages Program Qualification Customer Messages
- 22. A PROVEN SOLUTION Launched in 2010 thru Channel Partners Installed at over 150 Financial Institutions • Ranging from $50M to $30B • 5 Million accounts on A360 • $100 Billion Total Deposits Holistic view of the customer to include checks, ACH, debit, bill pay, direct deposit, eStatement, loans, etc. BAI Best in Show Best Midsize Bank CONFIDENTIAL
- 23. CONFIDENTIAL
- 24. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL24
- 25. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL25
- 26. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL26
- 27. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL27
- 28. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL28
- 29. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL29
- 30. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL30
- 31. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL31
- 32. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL32
- 33. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL33
- 34. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL34
- 35. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL35
- 36. © 2015 SAYLENT TECHNOLOGIES, INC. CONFIDENTIAL36
- 37. Launched new flagship account in March 2013. CNN award for Best Midsize Bank in 2013, due to A360- driven Checking account. Program attributes: - Cash Back on Debit transactions - Balance and Estatement requirement - cash back on qualified transfers to savings - 5% annual savings bonus 0 10,000 20,000 30,000 40,000 50,000 60,000 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 #Accounts New Checking Accounts Best Midsize Bank CONFIDENTIAL ACCOUNT360 USE CASE: $22B ASSET BANK
- 38. ACCOUNT360 USE CASE: $7B ASSET FI ©2015 SAYLENT TECHNOLOGIE S,INC. CONFIDENTIAL CONFIDENTIAL
- 40. THANK YOU FOR ATTENDING How can we help your bank? Let’s schedule a follow up call and in-depth demo to see how Account360 can help your bank. CONFIDENTIAL
- 41. AND THE WINNER IS… CONFIDENTIAL
- 42. CONTACT INFORMATION CONFIDENTIAL Damien Hayes Senior Revenue Consultant 508.405.2017 dhayes@saylent.com Mike Kersten Sales Director 508.570.5023 mkersten@saylent.com
Notas del editor
- Financial Crisis – margin compression, regulatory pressure Data Aggregation – trying to make all the data, from all those sources, consistent and usable. Channel Usage – Spending untold dollars and hours on mobile, bill pay, remote deposit capture, etc. And as if that’s not enough, during this time, credit unions have struggled to maintain high levels of services. So what got pushed aside?
- Financial Crisis – margin compression, regulatory pressure, foreclosures, risk assessments, etc.
- Data Aggregation – trying to make all the data, from all those sources, consistent and usable.
- Financial Crisis – margin compression, regulatory pressure Data Aggregation – trying to make all the data, from all those sources, consistent and usable. Channel Usage – Spending untold dollars and hours on mobile, bill pay, remote deposit capture, etc. And as if that’s not enough, during this time, credit unions have struggled to maintain high levels of services. So what got pushed aside?
- Channel Usage – Spending untold dollars and hours on mobile, bill pay, remote deposit capture, etc.
- We at Saylent feel like the response to these disruptions on their business has been focused solely on the customer experience within the channel and very little focus on product and program innovation. Not only has our product offering remained essentially the same throughout all of changes mentioned, above, we have also failed to recognize the severe impact this has had on service. Many financial institutions fail in customer service strategies because they call their customers by name, but then proceed to treat them all the same. Knowing a name is not enough, especially if you proceed to treat all your customers as an account number, not a human. In the end all your customers who enter as vibrant 3-dimensional humans exit with banking products that treat them as 2-dimensional caricatures of who the bank thinks they should be. There is a disconnect that leads to apathy among most banking customers.
- Product designs do not support strategic goals Failure to encourage profitable behaviors, broaden relationships, and/or attract new members Limited differentiation creates commoditization Cookie-cutter product designs promote commodity pricing and encourage “rate” shopping Too many products create front-line sales challenges Multiple “look-a-like” products force front-line staff to sell easiest product, not the best one for the member What is the point of building out your channels if your product offering falls flat and fails to inspire your member to broaden their wallet share with your credit union.
- What are the current ages of Millennials? 15-25 20-30 25-35 15-35 Answer: 15-35 While there is some variance, it is generally accepted that Millennials were born between the years of 1980-2000. This represents roughly 80 million people. That’s larger than Baby Boomers and 20% larger than Gen X.
- Millennials are not just a bunch of young kids, these are people in their early 30’s and late 20”s. Their new normal So let’s talk about these different walks of life for a minute. Saylent commissioned a survey of consumers and small businesses to determine preferences in their deposit products. Survey segmented respondents by income, age, banking services used and banking services being shopped for. Conducted November 2014 Surveyed 1,200 consumers and 400 small businesses Consumers represented 3 groups: lower mass market, with investable assets from $1,000-25,000 upper mass market, with investable assets from $25,000-100,000 mass affluent, with investable assets over $100,000 Also surveyed 400 small businesses small businesses surveyed ranged from $250,000 to $1 million in revenue.
- 97% of small business owners are satisfied with their current banking relationship. So are you going to try and compete for that 3% or are you going to disrupt that market?
- So if the entire market place is rewarding their customers for their behaviors, whey are we so slow to catch on?
- The lack of response to this change in culture and virtually no innovation, has left our industry completely vulnerable to attack. Further, what we consider “non-traditional” isn’t that at all for anyone under 30 years old. While we agree creating a seamless experience for your member in their preferred channel is critical. We also believing creating innovative member and account loyalty programs that add value to the member experience and drive profitable behavior for the bank will definitely redefine service and give you the fire power to not only beat your standard market competition but also the disrupters in the graphic below. You can’t just create an millennials strategy, there's 80 million people. You have to look deeper at the data to understand their age, location, buying behaviors, and provide services and rewards for things that make sense to the bank. Are they moving into a new social economic status? You need strategies within the strategy.
- You know us well from CO-OP/Revelation and this is essentially how our company got it’s start; working with large processors that white labeled our Card360 solution. In fact, we just signed a new agreement with Fiserv so this area of our business continues to thrive. It was through our experience with these processors that we got very good at aggregating data. So, we recognized the same need on the deposit account side of the house. Hence, A360 was born. We brought our solution to JHA and they deployed it to their banking clients which was met with great success. So much so that Symitar wanted to get in on the action for their credit unions and we have now signed our first Symitar client and we are looking for our first DNA client, which brings us to you.
- This is why we saw an opportunity to create account and member-level loyalty programs utilizing and leveraging ALL of your data from multiple sources. This aggregated data is what allows us to incent members based on all of their behaviors. And that is at the core of behavior-based pricing. There’s multiple ways that we can create programs to incent your members to perform profitable interactions. At the base level, account level programs that focus only on the account-related behaviors and interactions. Ex. On the right you see the things that Bethpage may want: Increased deposits, increased debit card usage, increase eStatement adoption. The way we drive those behaviors is by incenting through the items on the left. But what really makes Saylent unique, especially from limited capabilities in some core platforms, is our ability to look at this from the member-level, as well, and look at the full picture of aggregated deposits, loans, card activation, penetration, and usage, wealth management, channel usage, etc and use those same incentives to push these areas forward. We have case studies that we can talk about later that prove these incentives work when it comes to driving these profitable results and revenue. Stop giving generic rewards that don’t match If there is value, people are willing to pay more. This allows you to increase revenue and reduce costs while keeping members happy Create a win-win relationship that benefits both you and your members
- I’ve shared a couple of high-level ideas but let’s look at what others are doing. How about B of A? They just rolled our a customer-level rewards program that wraps in the entire relationship. When you think about rewards, most people think of cards, but now it’s becoming more than that. Explain the screen: Aggregated balances across the institution. As you scroll, it changes. Incentives include reduction in mortgage fees, interest rate boosts. Note: we do not waive fees, we rebate fees. This is cleaner from a GL perspective. The mortgage GL still shows that they made the money, but the rebate comes out of the rebate GL. You can also see the rebate on the statement.
- Another good example is Chase Cash Back. If you set up direct deposit and auto pay, they give you 1% cash back at the end of the year. So, this allows people to get some value out of these huge payments they make each month since you can’t pay with a credit card. It’s a great way to differentiate with those mortgage rate shoppers. Citi Double Cash – cash back twice. 1% when you buy and 1% when you pay. A360 can take in the annual payment amount via the payment file and put cash back in the account.
- So let’s talk about the process, the journey to get you there… Assessments Market demographics Data – We’ll take a look at your transaction data and that includes bill pay, wires, ACH, not just debit and credit card transactions. We evaluate these trans by channel usage. At that point we’ll make suggestions and based on you preference, we can adjust current products, create new products, and/or overlay the reward programs over current products. We will give you an enterprise-wide, holistic perspective. You have cash bonuses today we can certainly automate that. No fee checking – what about letting them earn the rebate? Reward for mobile check deposits Reward for no overdrafts Business Checking – You have analysis, but want about rewards for behaviors you want them to do? Next we will develop a custom ROI and establish some revenue projections. In March, you averaged about 9 Pin and 13 Signature transactions per card. What would it look like we increased those number to 11 and 18? Launch the programs ROI comparisons will likely be quarterly and we can determine if adjustments need to be made. We realize that may not happen often, but that’s the value of our system: when changes are necessary, you can make them easily and without kicking off some big project. True speed to market.
- As I mentioned, we launched Account360 in 2010 through our channel partnership with JHA and here are some of the results…
- This is the landing page for your institution. We’ll talk more about this in a minute.
- Here’s where we manage your different reward programs and reward types. Account Level Customer Level Bonus – also a unique feature of A360 We’re going to look at a very basic reward program to give you a feel for the system.
- General tab with basic info. Start date, end date, etc. When we select details…
- It shows the gist of the program. There’s conditions (Dir Dep, eStatements, 18 debit transactions) and the corresponding rewards, above. Redeem ATM fees and an interest rate increase.
- Let’s look at another one: High Interest Checking
- The details tab shows the tiers that you can have with Tier 1 being the best possible. But even if they don’t meet all the criteria, you can still reward them for some of their behaviors. And you’re not limited to only 2. If you select Qualification Results…
- You can see the results of the program for this statement cycle. And you can further drill down and see the accounts…
- And drill down further to the specific account…
- Statement messages for both
- Let’s look at another one: High Interest Checking
- The considered tab shows the multiple account types that are considered for a customer level reward. The Pay To tab is similar.
- Aggregated Balance – Shows the balances that you want to consider for aggregation. And the balance type is based on your preference. So, if you didn’t want to use current balance, you can use the AVG collected balance. Basically, whatever balance types you have on DNA, you’ll see here.
- Then, as before, the conditions drive the rewards…
- The results: they launched with us and within 9 months they opened 40,000 new accounts. And this landed them the CNN Money Award. Acquisitions
- Capital Bank is based in Miami. They are owned by an investment firm that bought a bunch of banks in the SE and a lot of BofA branches. Naturally, they had a lot of different products and they wanted to consolidate and create some new ones that were designed to drive profitable behaviors. They wanted to keep free checking so they developed a product that made it ridiculously easy with minimal transactions to make it free. What is really interesting is that after their market assessment, they found they had two sets of clients: Rate sensitive and Cash back sensitive. Sot, they rolled out the two separate products with one paying a higher rate and the other gave cash back.
- Here are the results. At a basic level we know we can drive these areas of improvement. Also Dan works for us.
- We don’t expect you to do this alone. We are here to assist as much or as little as you prefer. New products-consumer/commercial Re-pricing-competitive position Targeted rewards- specific territory-age group-transaction based Underperforming segments- debit activity/e-statement penetration/check writing True segmentation strategies-over 55/green technology/military/specific branch/student segments Profile payment behavior-what are my customers doing from a transaction perspective Analyze customer profitability metrics- who are my most profitable customers Increase non-interest revenue-creating specific conditions/behaviors promoting non interest activity
- We don’t expect you to do this alone. We are here to assist as much or as little as you prefer. New products-consumer/commercial Re-pricing-competitive position Targeted rewards- specific territory-age group-transaction based Underperforming segments- debit activity/e-statement penetration/check writing True segmentation strategies-over 55/green technology/military/specific branch/student segments Profile payment behavior-what are my customers doing from a transaction perspective Analyze customer profitability metrics- who are my most profitable customers Increase non-interest revenue-creating specific conditions/behaviors promoting non interest activity
- We don’t expect you to do this alone. We are here to assist as much or as little as you prefer. New products-consumer/commercial Re-pricing-competitive position Targeted rewards- specific territory-age group-transaction based Underperforming segments- debit activity/e-statement penetration/check writing True segmentation strategies-over 55/green technology/military/specific branch/student segments Profile payment behavior-what are my customers doing from a transaction perspective Analyze customer profitability metrics- who are my most profitable customers Increase non-interest revenue-creating specific conditions/behaviors promoting non interest activity